Good practice examples of Good practice examples of

developing local SMEs and developing local SMEs and

opportunities for local opportunities for local

business to become part of business to become part of

the supply chainthe supply chain

Washington D.C., June 19th 2006

Experiences of the

Linkages Program in

CajamarcaMaría Cecilia Araujo M.María Cecilia Araujo M.

Regional Regional production data production data (country level)(country level)

1st. Gold producer 1st. Gold producer (3.33 mlls. ounces, (3.33 mlls. ounces, 2005)2005)

3rd. Milk producer 3rd. Milk producer (18.6% Nac).(18.6% Nac).

2nd. Wheat 2nd. Wheat producer (13.8% producer (13.8% Nac).Nac).

1st. Producer of 1st. Producer of bovine meat bovine meat (11.8% Nac).(11.8% Nac).

CAJAMARCA REGIONCAJAMARCA REGION

Capital Capital CajamarcaCajamarca

AltituteAltitute

(m.o.s.l.)(m.o.s.l.)2,7502,750

No of No of provinces provinces

1313

Superficie Superficie (Km2)(Km2)

33,317.533,317.5

Población Población (2005 Census)(2005 Census)

1’359,023 1’359,023 hab.hab.

% rural % rural population population (region, 2002)(region, 2002)

74.8%74.8%

% rural % rural population population (province, (province, 2002)2002)

54.6%54.6%

H UBN urban H UBN urban (region, 1994)(region, 1994)

42.3%42.3%

H UBN rural H UBN rural (region, 1994)(region, 1994)

85.2%85.2%

Cajamarca: Cajamarca: General informationGeneral information

Source:

INEI: 1994, 2002, 2005.

Minag: 2004

Potential effects of large scale mining Potential effects of large scale mining in Cajamarca: role of the Linkages in Cajamarca: role of the Linkages ProgramProgramOpportunity/Risk Opportunity/Risk generated by the generated by the mining activitymining activity

Role of the Role of the SME Linkages SME Linkages

Program Program CajamarcaCajamarca

InstrumentInstrument ImplementiImplementing partnerng partner

Business Business opportunity for opportunity for local SMEs local SMEs

(+)(+)

Strengthening Strengthening the business the business skills of local skills of local SMEs (mining SMEs (mining related). related).

Facilitation of Facilitation of the access to the access to the formal the formal financial systemfinancial system

-Local providers Local providers development project.development project.

-Sme access to the Sme access to the financial system financial system project.project.-Micro enterprises Micro enterprises access to the financial access to the financial system project.system project.

Recursos SACRecursos SAC

IFB-Recursos IFB-Recursos SACSAC

Colectivo Colectivo integral de integral de desarrollodesarrollo

Generation of high Generation of high dependency level dependency level of local economyof local economy

(-)(-)

Diversification Diversification of markets for of markets for local SMEs local SMEs (mining and no (mining and no mining related)mining related)

-Business encounters.Business encounters.-Technical assistance Technical assistance for product/market for product/market development.development.

Recursos SACRecursos SAC

Technoserve Technoserve Inc.Inc.

Declination of Declination of other economic other economic activities with activities with potentialpotential

(-)(-)

Strengthening Strengthening of the business of the business skills of local skills of local SMEs (non SMEs (non mining related)mining related)

-Agribusiness project.Agribusiness project.-Construction project.Construction project.-Artisan business Artisan business project.project.

CedescoCedesco

Technoserve Technoserve Inc.Inc.

Aid to Aid to artisansartisans

Linkages experience: Linkages experience: Suppliers development projectSuppliers development project

Detected demandDetected demand SMEs assisted, casesSMEs assisted, casesMinera Yanacocha.Minera Yanacocha. -Printing services (Foto Andina, Printing services (Foto Andina,

Publiser).Publiser).-Engineering services (Ceyca).Engineering services (Ceyca).-Garment products (JyR).Garment products (JyR).-Heavy equipment maintenance Heavy equipment maintenance (Urteaga).(Urteaga).-General services (American services).General services (American services).

Local/regional demand.Local/regional demand. - Printing services (Foto Andina, Printing services (Foto Andina, Publiser).Publiser).

- Engineering services (Ceyca, Santa - Engineering services (Ceyca, Santa Martha).Martha).- Garment products (JyR, NicNor).Garment products (JyR, NicNor).-Heavy equipment maintenance Heavy equipment maintenance (Urteaga).(Urteaga).-General services (American services).General services (American services).

Some facts:Some facts:

Number of assisted SMEs: 119

Number of employments involved: 506

Number of new employments generated: 35

Sales generated: US$ 12’748,755 (US$ 6’500.000 baseline data)

Linkages experience: Linkages experience: Financial access projectFinancial access project

Detected demandDetected demand SMEs assisted, casesSMEs assisted, cases

Optimization of financial Optimization of financial resources.resources.

-Engineering services (Ceyca).Engineering services (Ceyca).

Migration from personal Migration from personal loans to business loans.loans to business loans.

-Micro enterprises (El rey de los jebes).Micro enterprises (El rey de los jebes).

Financial products different Financial products different from credit line.from credit line.

- Printing services (Fotoandina).Printing services (Fotoandina).- Contractor & Sub contactor companies Contractor & Sub contactor companies (Inv. Cristian).(Inv. Cristian).

Better interest rates.Better interest rates. - General services (EBR negocios y General services (EBR negocios y servicios, Joowers).servicios, Joowers).

Some facts:Some facts:

Number of assisted MSMEs: 82

Number of new accesses to financial system: 38

Amount of financial resources obtained: 1’033,851 US$

Linkages experience: Linkages experience: Construction projectConstruction projectDetected demandDetected demand SMEs assisted, casesSMEs assisted, cases

Demand for construction Demand for construction goods.goods.

-Cinderblock producers.Cinderblock producers.- Clay Brick producers.Clay Brick producers.

Demand for construction Demand for construction services.services.

- Masons.Masons.- Plumbers.Plumbers.- Electricians.Electricians.

Demand for infrastructure Demand for infrastructure maintenance.maintenance.

-Communal associations.Communal associations.

Expocentro Pyme, a commercial linkage success for construction goods:Expocentro Pyme, a commercial linkage success for construction goods:

-Conglomeration of producers/construction goods (47 in 2003, 20 from 2004

onwards).

-Effects on standardization and product differentiation.

-Sales generated: US$ 33,310 during 17 months (43% of the total sales generated by

the project).

Linkages experience: Linkages experience: Artisan project (Aid to artisans)Artisan project (Aid to artisans)

Detected demandDetected demand SMEs assisted, casesSMEs assisted, cases

Local market (tourism, Local market (tourism, institutional demands, hotel institutional demands, hotel exhibits).exhibits).

-Clay products (Keramic Makkas).Clay products (Keramic Makkas).

-Textile products (La Collpa, Granja Textile products (La Collpa, Granja Porcón, Yuracyacu, Atoctambo, Cañafisto Porcón, Yuracyacu, Atoctambo, Cañafisto , Cuyumalca)., Cuyumalca).

Domestic market (national Domestic market (national fairs)fairs)

International market International market (Create and Barrel, San (Create and Barrel, San Diego Zoo)Diego Zoo)

Some facts:Some facts:

Number of assisted artisans: 51

Number of employments involved: 51

Number of new employments generated: 14

Sales generated: US$ 47,912

Challenges:Challenges:

-Product standardization: in site assistance.

-Independence in the commercial relationships (exporters).

-Delivery timing.

-Volume of production.

Beyond the provision of Business Beyond the provision of Business Development Services:Development Services:

Do local governments have a role in the local economic Do local governments have a role in the local economic

development?development?

– Centralization problem in Peru.Centralization problem in Peru.

– Modernization process, including the Local Economic Modernization process, including the Local Economic

Development promotion role.Development promotion role.

– Capacity building requirements of local governments.Capacity building requirements of local governments.

Case: Business licensing in Cajamarca.Case: Business licensing in Cajamarca.

Development of other income-generating opportunities.Development of other income-generating opportunities.

– Mining activities complementing the development of tourism Mining activities complementing the development of tourism

supply chain.supply chain.

Case:Case: Tourist development in Huaraz and the involvement of Cía Tourist development in Huaraz and the involvement of Cía

Minera Antamina.Minera Antamina.

Business licensing in CajamarcaBusiness licensing in Cajamarca

Baseline data: Baseline data: Estimated time: 100 days.Estimated time: 100 days.Monetary cost: US$ 163.Monetary cost: US$ 163.

Problems generated:Problems generated:- Increment of informal business.- Increment of informal business.- Decrease of Municipal revenues.- Decrease of Municipal revenues.- Restriction to SMEs growth (legal - Restriction to SMEs growth (legal status, with market value).status, with market value).- Corruption- Corruption

Solution proposed:Solution proposed:- “One-stop-shop” centralized location.- “One-stop-shop” centralized location.- Development of an electronic - Development of an electronic government portal.government portal.

Linkages Program contribution:Linkages Program contribution:-Technical assistance for analysis and Technical assistance for analysis and redefinition of processes.redefinition of processes.- Follow up.- Follow up.

Results:Results:Estimated time: 3 days.Estimated time: 3 days.Monetary cost: US$ 140Monetary cost: US$ 140

Perspective:Perspective:Implementation of a web server Implementation of a web server systemsystem(local municipality, public registers (local municipality, public registers and SUNAT).and SUNAT).

Sustainable tourism in Huaraz: Sustainable tourism in Huaraz: GesturGesturGeneral information:-Ancash is a region with a population of 1’039,415 (70% of poorness incidence).-Limited use of tourist resources(Huascarán, Huayhuash).-Presence of high scale miningactivities (Cía Minera Antamina).

Gestur project:Gestur project:

-Incorporation of rural population in the-Incorporation of rural population in thesupply chain of tour operators supply chain of tour operators (through BDS provision).(through BDS provision).

-Development of new alternative Development of new alternative tourist circuits (rural approach).tourist circuits (rural approach).

-Improvement of the business -Improvement of the business environment.environment.

Gestur strategy:Gestur strategy:

-Alliance with the regionalAlliance with the regionalactors (mining company vg).actors (mining company vg).

-Technical assistance toTechnical assistance toLocal governments Local governments (implementation of tourism(implementation of tourismdevelopment plans).development plans).

-Alliance with tourAlliance with touroperators.operators.

-Articulation to BDS Articulation to BDS providers.providers.

Lessons learned:

• Joint definition of objectives and goals (IFC/invested company) is crucial.

• A linkages program can go further than the suppliers development experience,

contributing to sustainable local economic development.

Sustainability of the results lies on:

• Market approach of the SMEs capacity building process (linked to actual & potential

market requirements, not only to the mining demand).

• Contribution to the improvement of the business environment, generation of synergies

with public and private sector (not conclave).

We create opportunities

Thanks for your attention